Getting Paid Faster: 10 Tips for Small Business Cash Flow

The Accounted Business Team·9 February 2026·9 min read

Late payment is the single biggest financial headache for small businesses in the UK. According to the Federation of Small Businesses, the total amount owed in late payments to small firms is over £23 billion at any given time. More than 50,000 businesses close each year because of cash flow problems — many of them profitable on paper, but starved of actual cash.

If you are a sole trader or small business owner, you have almost certainly experienced it. The job is done, the invoice is sent, and then the waiting begins. Thirty days turns into sixty. Sixty turns into ninety. You chase, get promises, and wait some more. Meanwhile, your own bills do not wait.

You cannot always prevent late payment, but you can dramatically improve your chances of getting paid quickly. Here are ten practical steps that work.

1. Set Clear Payment Terms Before You Start

Payment expectations should be agreed before any work begins, not after you have delivered it. Include your payment terms in your quote, proposal, or contract. Make them explicit and unambiguous.

Your terms should state:

When payment is due (14 days, 30 days, or on completion)
How payment should be made (bank transfer, card, Direct Debit)
What happens if payment is late (interest, suspension of work)

Do not assume clients know your terms. Spell them out clearly every time. A client who agrees to 14-day terms before work starts is much harder to argue with than one who claims they did not know.

Shorter Is Better

There is no law saying you must offer 30-day terms. Many sole traders now invoice on 14-day or even 7-day terms. Some require payment on completion or even upfront.

For new clients, consider shorter terms until you have established a track record. You can always extend terms later as trust builds.

2. Invoice Immediately

This sounds obvious, but it is astonishing how many sole traders delay invoicing. They finish the job on Friday, mean to send the invoice over the weekend, and it goes out the following Thursday. That is nearly a week of free credit before the payment clock even starts.

Invoice the moment the work is complete. If you finish at 4pm on a Tuesday, send the invoice at 4:15pm. Every day you delay invoicing is a day added to your wait.

Better yet, if you are working on a larger project, agree to milestone invoicing — invoice at defined stages rather than waiting until everything is finished. This smooths your cash flow and reduces the risk of a large unpaid amount at the end.

3. Make It Easy to Pay You

The harder you make it for a client to pay, the longer they will take. Remove every possible barrier between your invoice and the money arriving in your account.

Bank Transfer

Include your bank details clearly on every invoice — sort code, account number, and account name. Do not make clients email you to ask for payment details.

Online Payment

Include a "Pay Now" link on your invoices that allows clients to pay by card or bank transfer instantly. Many invoicing tools and accounting software offer this feature. The fewer clicks between the invoice and payment, the better.

Direct Debit

For recurring work — retainers, monthly services, ongoing maintenance — set up a Direct Debit using a service like GoCardless. The payment is collected automatically each month. No invoicing, no chasing, no waiting. This is the gold standard for regular payments.

Multiple Options

Not every client wants to pay the same way. Offering bank transfer, card payment, and Direct Debit means clients can choose the method that works for them, removing excuses about not having the right payment method available.

4. Require Deposits for Large Projects

If you are taking on a significant piece of work — anything that will consume more than a week of your time or involve substantial material costs — ask for a deposit before starting.

A deposit of 30% to 50% upfront achieves two things. First, it puts immediate cash in your account to cover your costs. Second, it demonstrates the client's commitment. A client who refuses to pay a reasonable deposit is a red flag.

For very large projects, consider a payment schedule: 30% on agreement, 30% at a defined midpoint, and 40% on completion. This keeps cash flowing throughout the project.

5. Check Credit Before Extending Credit

If you are providing goods or services before receiving payment, you are effectively extending credit. For consumer clients, there is limited ability to check creditworthiness. But for business clients, you can and should do some basic checks.

Companies House: check the company's filing history and most recent accounts. Late filings and overdue accounts are warning signs.
Credit reference agencies: services like Creditsafe and Experian offer business credit reports for a few pounds per search. They show payment behaviour, court judgments, and credit scores.
Ask for references: for large or ongoing contracts, ask the client for trade references and actually follow up on them.
Trust your instinct: if something feels off about a prospective client — they are evasive about payment terms, they push back aggressively on deposits, or they pressure you on price — these are warning signs.

6. Chase Promptly and Systematically

The moment an invoice becomes overdue, follow up. Not next week. Not when you get round to it. The same day.

A Simple Chasing Schedule

Due date + 1 day: send a friendly email reminder. "Just a quick note to let you know invoice #123 was due yesterday. Payment details are below."
Due date + 7 days: follow up with a phone call. Emails are easy to ignore. Phone calls are not.
Due date + 14 days: send a firmer written reminder. State that the invoice is now overdue and reference your payment terms.
Due date + 30 days: send a formal letter before action. State that you will pursue the debt through legal channels if payment is not received within 7 days.

The key is consistency. Chase every overdue invoice, every time, without exception. Clients quickly learn which suppliers they can pay late and which ones follow up immediately. Be the one who follows up immediately.

7. Charge Interest on Late Payments

UK law gives you the right to charge interest on late commercial payments. The Late Payment of Commercial Debts (Interest) Act 1998 allows you to charge interest at 8% above the Bank of England base rate on overdue invoices from business clients.

As of early 2026, with the base rate at 4.5%, that means you can charge interest at 12.5% per year on overdue amounts. On a £5,000 invoice that is 30 days late, that is approximately £51 in interest.

Statutory Compensation

In addition to interest, you can claim fixed compensation for the cost of recovering a late payment:

£40 for debts up to £999.99
£70 for debts between £1,000 and £9,999.99
£100 for debts of £10,000 or more

You do not need to have included these terms in your contract — they are statutory rights. However, stating on your invoices that you will exercise these rights can be a powerful deterrent.

Should You Actually Charge Interest?

This is a judgement call. For a valued client who is a few days late once, charging interest may damage the relationship more than it is worth. For serial late payers, it sends a clear message. At the very least, mentioning the right to charge interest on your invoices encourages timely payment.

8. Stop Working Until Payment Is Received

If a client has outstanding overdue invoices and is asking for more work, pause. Do not continue delivering value to someone who is not paying for the value you have already delivered.

This feels uncomfortable, especially when you worry about losing the client. But a client who does not pay you is not a client worth keeping. Your time would be better spent working for clients who do pay.

Be professional about it: "I would love to continue working with you, but I need to clear the outstanding balance before taking on additional work. Once invoice #123 is settled, I can schedule the next phase immediately."

9. Use Written Contracts for Every Engagement

A verbal agreement is legally binding, but it is much harder to enforce. Every piece of work you take on should be covered by a written agreement that includes:

Scope of work
Payment terms and amounts
What constitutes completion
What happens if the scope changes
Late payment consequences
Your right to suspend work for non-payment

This does not need to be a lengthy legal document. A clear one-page terms of engagement or a detailed email that the client confirms in writing is far better than nothing.

Having written terms makes debt recovery dramatically easier if things go wrong. Without them, late payment disputes often come down to "he said, she said."

10. Know Your Debt Recovery Options

If a client simply will not pay despite your chasing, you have several options.

Mediation

A neutral third party helps you and the client reach an agreement. This is low-cost and less adversarial than court action. The Small Business Commissioner offers free mediation for disputes with larger businesses.

County Court Claim (Money Claim Online)

For debts up to £100,000, you can file a claim through Money Claim Online at gov.uk. The court fee is based on the claim amount — for example, £115 for a £3,000 claim. If the client does not respond or defend the claim, you get a judgment in your favour.

Most debtors pay when they receive a court claim rather than face a County Court Judgment (CCJ) on their credit record.

Statutory Demand

For debts over £750, you can serve a statutory demand. If the debtor does not pay within 21 days, you can petition for their bankruptcy (individuals) or winding up (companies). This is a serious step, but the threat of it is often enough to prompt payment.

Debt Collection Agencies

For a percentage of the debt (typically 10% to 25%), a collection agency will pursue the payment on your behalf. This is worth considering for larger amounts where you have exhausted your own chasing efforts.

Prevention Is Better Than Cure

The best approach to late payment is to minimise it from the start. Clear terms, prompt invoicing, easy payment methods, deposits for large work, and consistent chasing solve the majority of late payment problems before they become serious.

Let Accounted Keep Your Cash Flow on Track

Tracking invoices, monitoring who owes you money, and keeping on top of your cash flow is much easier with the right tools. Accounted gives you a clear picture of your finances in real time, and Penny, your AI bookkeeper, helps categorise every payment and expense automatically — so you always know where you stand. Start your free trial and take control of your cash flow today.

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